In early October, DualEntry, an AI enterprise resource planning (ERP) startup, announced a $90 million Series A round led by Lightspeed and Khosla Ventures, valuing the one-year-old business at $415 million.
The company seeks to replace legacy software like Oracle NetSuite with its offering that can automate routine tasks and provide predictive insights. The massive funding round from top-tier VCs signaled that the startup is likely experiencing phenomenal revenue growth.
However, one VC who declined to invest told TechCrunch that DualEntry’s annual recurring revenue (ARR) was just around $400,000 when he reviewed the deal in August. DualEntry’s co-founder, Santiago Nestares, denies that number. When asked about revenue when the deal closed, Nestares said it was “considerably higher than that.”
Even so, an extremely handsome valuation relative to revenue is becoming an increasingly common investment strategy among top-tier VC firms. The tactic is known as “kingmaking.”
This approach involves deploying massive funding into one startup in a competitive category, aiming to overwhelm rivals by granting the chosen company a bank-account advantage so significant that it creates the appearance of market dominance.
Kingmaking isn’t new, but its timing has shifted dramatically.
“Venture capitalists have always evaluated a set of competitors and then made a bet on who they think the winner is going to be in a category. What’s different is that it’s happening much earlier,” said Jeremy Kaufmann, a partner at Scale Venture Partners.
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This early aggressive funding contrasts with the last investment cycle.
“The 2010s version of this was just called ‘capital as a weapon,’” said David Peterson, partner at Angular Ventures. He pointed out that massive funding into Uber and Lyft was a canonical example of this, but the capital weaponization for the ride-sharing companies didn’t begin until they reached their Series C or D rounds.
As with Uber vs. Lyft, investors in DualEntry’s competitors Rillet and Campfire are evidently just as eager to see their bets succeed with the help of substantive capital. In early August, Rillet raised a $70 million Series B led by a16z and Iconiq, just two months after the company closed a $25 million Series A led by Sequoia.
Similarly, Campfire AI had two back-to-back funding rounds. In October, it grabbed a $65 million Series B, just a couple of months after announcing a $35 million Series A round led by Accel.
AI ERP is just one of the several AI application categories where startups are raising funding in rapid succession. “There’s no new data between rounds. Series Bs happen 27-60 days after Series As regularly,” Jaya Gupta a partner at Foundation Capital, posted on X last month. Besides AI ERP, she wrote that she sees this pattern in categories such as IT service management and SOC compliance.
While some startups like Cursor or Lovable have reportedly grown at a breakneck pace between their back-to-back rounds, several VCs told TechCrunch that’s not the case for all. AI ERPs and several other categories of startups that raised multiple rounds in 2025 still have ARRs in the single-digit millions, these investors said.
Although not all VCs agree that kingmaking is a sound investment strategy, there are reasons why offering large amounts of capital could be beneficial even when the startup maintains a modest burn rate. For instance, well-funded startups are perceived as more likely to survive by large enterprise buyers, making them the preferred vendor for significant software purchases. That’s a strategy that helped legal AI startup Harvey attract large law firm customers, investors say.
Still, history shows that massive capitalization offers no guarantee of success, with notable failures, including the logistics company Convoy and the bankruptcy reorg of scooter company Bird.
But those precedents don’t faze major VC firms. They prefer to bet on a category that seems like a good case for AI, and they would rather invest early because, as Peterson put it: “Everybody has fully internalized the lesson of the power law. In the 2010s, companies could grow faster and be bigger than almost anybody had realized. You couldn’t have overpaid if you were an early Uber investor.”
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